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Amendments to the Public Works Contracts

The Government Contracts Committee for Construction (the “GCCC”) carried out a review of the performance of the Public Works Contracts in 2014. Subsequently, the Office for Government Procurement published a report on the review setting out a series of interim recommendations. See our update on the report here. Amongst these recommendations were three interim amendments to the conditions of contract which have now been formally incorporated into the full suite of Public Works Contracts.

The Department of Public Expenditure and Reform published circular 01/16 “Construction Procurement – Revision of Arrangements for the Procurement of Public Works Projects” (the “Circular”) in January 2016. The Circular sets out:

a summary of the amendments to the Public Works Contracts (PW-CF1 – PW CF5), and

a guide on the implementing measures to be used.

The new forms of Public Works Contracts were published 22 January 2016. For the most part, they will have effect from 4 April 2016 for the procurement of public works projects.

Bill of Quantities (“BoQs”)

Contracting authorities now have a mandatory responsibility to produce a full measured BoQs to an approved method of measurement for use with the Public Works Contracts that are Employer-designed forms and no other document is to be included in the Pricing Document.

A Compensation Event will occur if there are any inconsistencies between the BoQs and the Works Requirements. As a result, the Employer will take the risk and the Contractor will now be able to rely upon the BoQs to arrive at their tender sum. The Works Requirements will take precedence over the BoQs as regards the extent of the Works to be completed. The accuracy required for the BoQs is intended to provide for a more competitive pricing at tender stage.

Specialist Contractors

A new separate procedure permitting specialist sub-contractors (“Specialists”) to tender directly to the contracting authority has been introduced in the Employer-designed forms. The Specialists will then be nominated to the main contractor as sub-contractor for a specialist contract sum, which will form part of the contract sum with the Contractor. The Contractor will be entitled to tender, in their tender, a percentage addition for each Specialist which will form part of their Contract with the Employer. It is intended that this change should provide Specialists with a more structured and transparent tender process.

Dispute Resolution

The introduction of an informal dispute resolution process at senior management level and a standing conciliator for pre-dispute management purposes. Where the contract sum is in excess of €10 million, a standing conciliator must be appointed by the parties. However if the contract sum is less than €10 million, it is at the discretion of the Employer. It is intended that this method will assist in reducing the volume of disputes that are currently being referred to the formal dispute resolution procedures.

Implementing Measures

The revised arrangements are being put in place with the new forms of contract effective from 4 April 2016. Whilst contracting authorities are encouraged to adopt the amended conditions from this date, there are exceptions, as it is accepted that the extent to which they can be adopted will depend on the scope of services under which the design team has been engaged in respect of Employer-designed contracts.

Where the procurement of consultancy services commences after 4 April 2016, the scope of services outlined in the briefing documents and in the Schedule must refer to the services required to comply with the new forms of contract.

Where the procurement of consultancy services commences before 4 April 2016, but the tender return date is after 4 April 2016, contracting authorities are to amend the scope of services to meet the requirements of the amended conditions and in some cases an extension to the tender period may be appropriate.

Exemption

Contracting authorities may, up until 8 January 2017, use the previous versions of the Public Works Contracts, either where:-

consultants are engaged before 4 April 2016, or

the deadline for receipt of tenders for consultants is prior to 4 April 2016 and their scope of services does not extend to the requirements of the new forms of contract.

Where the deadline for receipt of tenders from the works contractor is after 8 January 2017, contracting authorities are not permitted to use the previous versions unless sanctioned by the GCCC.

Concluding remarks

The amendments to the Public Works Contracts will assist in striking a balance between achieving successful public sector projects and ensuring sustainability in the construction industry. These measures are intended to be the first in the roll out of a number of recommendations, which will be introduced on a phased basis following consultation with the industry and stakeholders.

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